AG2002/3366, Transcript of Proceedings [2002] AIRCTrans 2675 (15 July 2002)

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TRANSCRIPT OF PROCEEDINGS

AUSTRALIAN INDUSTRIAL

RELATIONS COMMISSION

SENIOR DEPUTY PRESIDENT WATSON

AG2002/3366

APPLICATION FOR VARIATION OF CERTIFIED AGREEMENT
TO REMOVE AMBIGUITY

Application under Section 170MD(6) of the Act
by Kendell Airlines (Aust) Pty Ltd re Kendell
Airlines Pilots' Enterprise Agreement 1998

DARWIN

8.30 AM, FRIDAY, 28 JUNE 2002

PN1

THE SENIOR DEPUTY PRESIDENT: I will take appearances, please?

PN2

MR J. D'ABACO: If the Commission pleases, I seek leave to appear on behalf of Ansett Australia Limited (Administrators appointed) and Kendell

PN3

Airlines (Australia) Pty Limited (Administrators appointed).

PN4

THE SENIOR DEPUTY PRESIDENT: Thank you.

PN5

MR S. LUTTON: If the Commission pleases, I appear for the Australian Federation of Air Pilots.

PN6

THE SENIOR DEPUTY PRESIDENT: Thank you. Is there any objection to leave for Mr D'Abaco?

PN7

MR LUTTON: No objection to leave at this stage, no.

PN8

THE SENIOR DEPUTY PRESIDENT: Leave is granted. The parties will excuse me if I continue to adhere to Darwin dress standards. We will proceed nonetheless. This is an application, I think, by your client, Mr D'Abaco?

PN9

MR D'ABACO: Yes, your Honour. It is an application pursuant to section 170MD(6) of the Act to vary a number of certified agreements to, in effect, extend the operation of stand-down provision which exist in those agreements from 30 June 2002 to 15 August 2002. The purpose of the extension of the stand-down orders, your Honour, is to facilitate the orderly sale of Kendell Airlines and Hazelton Airlines to Australia-Wide, which I am pleased to advise if all things go according to plan, will be completed by 21 July.

PN10

Can I turn your Honour, firstly, to a number of the applications where I am instructed the ACTU consents to the application and, on the basis of that consent - - -

PN11

THE SENIOR DEPUTY PRESIDENT: Mr D'Abaco, we have received correspondence from Mr Watts from the ACTU indicating consent of unions affiliated to that body and, on my understanding, that involves each of the agreements other than Kendell Airlines Pilots' Enterprise Agreement. Is that the situation?

PN12

MR D'ABACO: That's correct, sir. In respect to the matter numbers, those to which the ACTU have consented on behalf of the relevant affiliates are matters AG2002/3367 through to AG2002/3371 inclusive which leaves, of course, the matter of AG2002/3366 involving the pilots.

PN13

THE SENIOR DEPUTY PRESIDENT: Yes, thank you.

PN14

MR D'ABACO: My understanding is that my instructors have filed with the Commission draft orders in respect of those applications to which the ACTU has consented.

PN15

THE SENIOR DEPUTY PRESIDENT: And in each of those matters, the relevant date is 15 August 2002?

PN16

MR D'ABACO: Yes, sir.

PN17

THE SENIOR DEPUTY PRESIDENT: Thank you.

PN18

MR D'ABACO: Turning to the matter where in my understanding the AFAP is opposing the application, this is the application in respect of the Kendell Airlines Pilots' Enterprise Agreement 1988 [sic]. You will recall, sir, that the last time we appeared before you, the Federation indicated two principal concerns in support of their application to resist the variation of the stand-down provisions at that time. The first of those was in relation to the issue of the re-training of CRJ pilots and the second was in relation to the issue of redundancies and the processing of redundancies.

PN19

You may recall that at the last hearing on 30 May it was envisaged that there would be a meeting between representatives of the purchaser, Australia-Wide, Kendell, Hazelton and the Federation and it was envisaged that that meeting would take place before a report-back hearing on 17 June. You might recall, your Honour, that the report-back hearing was not in respect of any application dealing with the stand-downs but rather the application which had previously been notified by the Federation by way of a dispute notification regarding those issues.

PN20

THE SENIOR DEPUTY PRESIDENT: Yes.

PN21

MR D'ABACO: You will also recall that the meeting didn't take place before the report-back hearing as was envisaged and, instead, it took place on 19 June. Before that time, at the report-back hearing on 17 June, you issued some recommendations in respect of those two issues of re-training and also for the new purchaser to provide some information vis a vis its future plans.

PN22

Now, I am instructed that a meeting did take place on 19 June, your Honour, here in Melbourne, under the auspices of the ACTU and present at that meeting were representatives of Kendell and Hazelton Airlines, also Australia-Wide, and also, of course, representatives of the various unions with members in the operation.

PN23

I am instructed that, at that meeting of all of the relevant union, Mr Jones, Michael Jones, the Chief Executive Officer of Australia-Wide, put forward information regarding the future operations of the airline under its new owners and, at that meeting, Mr Jones indicated the proposed routes which would be flown by the new airline in the event that Australia-Wide were the purchaser, the number of aircraft that would be operating within the new airline - and he indicated, I understand, that the new airline would operate 22 SAAB and 7 Metro aircraft - and he also gave an indication of the number of pilots who would be employed by the airline once it was fully operational in the sense that the airline has been running at a reduced level of operations to current date, hence the stand-down provisions, but once operations are ramped up, they would envisage employing between 261 to 275 pilots and approximately 600 to 650 total employees.

PN24

Now, immediately after the meeting of all of the unions took place, there was, as I think your Honour recommended, a meeting between the administrators of my client - between the administrators of Kendell and the Federation to discuss the issues of training and redundancies. If I could deal with the easier issue, perhaps, first. In respect of redundancies, the administrators indicated that, although there were a number of applications for redundancy from SAAB and Metro pilots, in circumstances where those aircraft were still being operated and there was clearly a need for those aircraft to be operated by the new purchaser, that the redundancies would not be acted upon.

PN25

In respect of the issue of re-training, there were discussions in relation to the costs of re-training, the administrator's position being that the entire re-training of CRJ pilots was a prohibitive cost and the Federation undertook to provide its assessment of what the training costs would actually be and I am informed by Mr Lutton - I have got no need to doubt that - that in fact the Federation had provided those figures to the administrators earlier this year but, unfortunately, had gone amiss for some reason - I don't know why - but were no longer at the administrator's disposal.

PN26

Be that as it may, I am informed again by Mr Lutton that the Federation's appraisal of the training costs were forwarded to the administrators at the beginning of this week and those matters are obviously under consideration by the administrator.

PN27

In the meantime, your Honour, the sale process has continued and I am pleased to advise that I am instructed that, this morning, the sale agreement will be signed by all the relevant parties with a completion date of 21 July 2002. So that, at that point in time, the merged entities of Kendell and Hazelton will no longer be under administration and the new purchase, Australia-Wide, will then assume responsibility for the operations of the new airline.

PN28

You will note, your Honour, that the application to vary the stand-down provision is to extend that date until 15 August. The ACTU in respect of its affiliates has consented to that extension. That date is sought, your Honour, even though it is some three weeks after the risk transfer date because, initially, Australia-Wide has conveyed to the administrators that they will be continuing Kendell's level of operations at its current level. Once, obviously, they familiarise themselves fully with the business and, as it were, are in control, they anticipate, I am instructed, that the level of services will increase and hence dispense with the need for any stand-down provisions, but that two to three week - probably more a three week sort of buffer period is sought by the administrator so as to facilitate an orderly sale and an orderly transition over to the new purchasers of the business.

PN29

THE SENIOR DEPUTY PRESIDENT: Does that mean that each of the existing employees will transfer over to the new entity and the new entity will then determine if any redundancies are required?

PN30

MR D'ABACO: I am not in a position to answer that question, your Honour. That ultimately is going to depend upon the terms of the sale agreement ultimately signed and I certainly have not viewed the sale agreement. I did see an early draft some time ago. I understand, however, that document has been feverish worked upon over the last couple of weeks which is in part explained why, on occasion, we have had some difficulty in obtaining some instructions because the parties have been negotiating that document. Ultimately, that would depend upon the sale agreement.

PN31

THE SENIOR DEPUTY PRESIDENT: Yes, very well.

PN32

MR D'ABACO: All I can say is this, sir: that it appears quite clear from what Australia-Wide is saying that they are looking at employing between 600 to 650 employees. My understanding at the moment is that Kendell employs between 900 to 950 employees, so there will, unfortunately, be some job losses. Whether those losses take place before the completion date or after the completion date, at this stage, is unknown.

PN33

THE SENIOR DEPUTY PRESIDENT: Very well.

PN34

MR D'ABACO: It is on that basis, your Honour, that the administrators say in respect of the application to extend the stand-down provision in the pilots agreement that we are now really in the home stretch. With the co-operation of all of the parties, perhaps bar one, we have been able, fingers crossed, to actually facilitate a sale of the business and, in circumstances where the destination is almost in sight, a final extension would, hopefully, assist in securing a sale of the business and obviously preserving services and preserving a degree of employment. If the Commission pleases.

PN35

THE SENIOR DEPUTY PRESIDENT: Very well. Thank you. Mr Lutton?

PN36

MR LUTTON: If the Commission pleases, we are opposing the extension of the stand-down on the same reason as was last referred to on 30 May. We've had no progress in relation to the issue of redundancies. You may remember that we've identified particular pilots and, at this stage, they have not been approved for redundancy and had applications in for some time. We've sought written confirmation of the reasons why their application for redundancy during this stand-down is not being processed. We have not received any indication of the reasons why they are not being processed. We have also, at the same time, asked for the administrator to commence the re-training process, to basically give us a date for a ground school. They have referred to the costings issues which we have addressed in February. We have again provided the information in relation to what we assess as the costing issues and we are seeking that a ground school be commenced, or a date set for that ground school, of the CRJ pilots as soon as possible.

PN37

At this stage, in terms of the briefing that we received from Australia-Wide Airlines, it was very much a briefing in terms of how they envisaged the operation in maturity. There is no detail at this stage in relation to the numbers at each base, what the level of activity when the transfer would take place - when it would take place, what it would mean at that point in time and we need some sort of certainty in relation to the pilots that are currently working under a stand-down - or under the stand-down, when they can take their redundancy or, if they are not able to take a redundancy, the reasons why so that we can look at those and take that matter further if need be, and we also need some movement in relation to the re-training in line with the EBA.

PN38

THE SENIOR DEPUTY PRESIDENT: How will the stand-down provision affect those issues - the extension or otherwise of the stand-down? I suppose, most directly, if the stand-down clause were not extended, what would occur on your submission?

PN39

MR LUTTON: If the stand-down was not to occur, I would imagine the pilots currently on the list would need to receive full-time salaries.

PN40

THE SENIOR DEPUTY PRESIDENT: Do you think that would be the likely outcome?

PN41

MR LUTTON: Well, the situation from the Federation's point of view is that we can't continue in the current state, nine months into administration, whereby we've got a large number of pilots with concerns, genuine concerns under their EBA and no movement towards addressing those from the administrator whatsoever. We're continually getting delayed in terms of those discussions in relation to the retraining as an issue and we would only see it as reasonable at the moment while they're taking advantage of a stand-down clause in relation to some pilots being stood down completely and other pilots working under daily rates arrangements or part-time arrangements, that where pilots are looking to access their redundancy, that they should be able to do so and at the same time, while the stand-down is continuing, issues to do with the retraining under the EBA need to be actively addressed and at this stage, nine months in, with the continual extension of stand-downs, we have not had either of those actions looked at.

PN42

THE SENIOR DEPUTY PRESIDENT: Very well. Anything further, Mr Lutton?

PN43

MR LUTTON: No, I don't have anything further at this stage.

PN44

THE SENIOR DEPUTY PRESIDENT: Yes, very well. Mr D'Abaco.

PN45

MR D'ABACO: Just one brief comment, your Honour. The Federation's concerns are noted and certainly they've been the subject of a number of hearings before the Commission on this issue. In my submission, those concerns of the Federation should not be allowed to precede this application for a stand-down or for exemption to stand down from the list. Essentially they're separate issues, your Honour. The Federation has notified the Commission of the dispute in respect of those matters. That's matter AG2002/2349 and you will recall, your Honour, that it was in respect of that particular matter that you issued a recommendation on 17 June.

PN46

In my submission, in the event that the Federation wishes to agitated those matters, the appropriate course of action is to do so under the auspices of that dispute notification. There are remedies there which can be sought by the Federation and relief which could be granted by the Commission, in the event that it's convinced that the leave ought to be granted but the matter of a stand-down to this application to vary the stand-down provisions really is a separate discrete issue and it will all be determined, in my submission, upon the matters that I put to you this morning and on previous occasions, rather than those which Mr Lutton has raised this morning.

PN47

THE SENIOR DEPUTY PRESIDENT: Yes, very well. Yes, these are applications pursuant to section 170MD(6) of the Workplace Relations Act 1996 to vary various certified agreements involving Kendell and Hazelton Airlines in matters 2002/3366 to 3371. In respect to matters 2002/3367 to 3371, the ACTU, on behalf of the affiliated unions party to the various agreements, consents to the variation sought which is to vary the date of operation of the stand-down clause in each of the agreements until 15 August 2002. In respect to the final matter, 3366, the extension of the stand-down clause to the same date is opposed by the Australian Federation of Airline Pilots on behalf of the members employed by the airlines.

PN48

The variation is sought in the circumstances of collapse of the Ansett Group of Companies which led to the insertion of stand-down provisions by Boulton J on 14 September 2001. They have been extended in their operation by orders of myself in the context of action by the relevant administrators to seek a purchaser of the airlines in order to maintain some operations and substantive employment of those engaged by the Kendell and Hazelton Airlines. The process of administration has extended over a 10-month period which has created uncertainty and some loss of income by employees over that period as they were engaged for less than their normal full-time period of employment. Some employees have been made redundant by the administrator over that period of time.

PN49

In relation to the most recent variation, there was in prospect a sale of the businesses to Australia Wide Airlines, which offered a basis of continuing operation of the airline at a substantial level with employment of a large proportion of remaining employees. That sale process has now advanced to the point where it is submitted that a sale agreement will be signed today by all relevant parties, completing on 21 July. It is further submitted that on the advice of the new purchaser - prospective purchaser at this point - to the unions, that would involve employment of some 600 to 650 of the remaining 900 or 950 employees in the new airline operation.

PN50

The extension of a stand-down provision is sought in order to facilitate the sale process and to provide a period beyond the sale of around three weeks for the purchaser to continue operating the airline at current levels whilst implementing its program to operate the airline at a high level of activity. The opposition by the AFAP is similar to the opposition to previous variations of the stand-down provision in respect of the Kendell Airline Pilots and Employees Agreement 1998. It is based on what it submits is a lack of action by the administrator to address concerns raised by it on behalf of its members in relation to retraining of certain pilots and the processing of redundancies of specified pilots.

PN51

Those matters have been addressed separately in disputes procedures in matter AG2002/2349 but without resolution to the satisfaction of the AFAP. I have decided that I will vary the agreements, indeed each of the agreements, to insert a date of effect for the stand-down provisions of 15 August 2002 as sought.

PN52

Whilst I accept that the period of nine to 10 months of uncertainty and loss of income for employees has been a burden upon employees and one which ordinarily should not continue, in the circumstances where there is now in prospect an immediate sale which offers the prospect of the employment of around two-thirds of existing employees and a sustainable continuing airline operation, it is my view that it would be in the public interest and in the interest of all of the parties to extend the period of operation of the stand-down provision as sought both to allow the completion of the sale and to provide the new purchaser with a short period in which to make necessary operational decisions to give effect to longer term plans for the airline.

PN53

In reaching that decision, I am conscious of the consent in respect to matters 3367 to 3371 and it is my view that there should be a consistent approach between the agreements in that decision as an extension of the stand-down provision would affect the sale arrangements of prospects of continuing operations and employment in respect to employees governed by all of the agreements, not only the pilots agreement. I would indicate that to the extent that the AFAP has continuing concerns about outstanding issues, it should further pursue them with the owner, bearing in mind the ownership will change, and is at liberty to further address those issues under the auspices of the Commission by bringing back on the matter which has previously addressed those issues.

PN54

Given the length of time over which employees, including pilots, have endured the stand-down provision, the purchaser should be conscious of the necessity to finalise ongoing employment decisions quickly in order that employees are given certainty as quickly as possible as to their status within the new airline operation and accordingly, the extension to 15 August 2002 is granted without any presumption that a further extension would be in prospect. Obviously application may be made but would be considered on its facts and on the submissions at the time. However, I would indicate that the new purchaser should be conscious of the considerable period of uncertainty to date and should endeavour to address employment issues and finalise employment arrangements as quickly as possible in order to bring an end to that uncertainty.

PN55

I will now adjourn these proceedings and I will issue orders in due course in respect to each of the agreements.

ADJOURNED INDEFINITELY [9.00am]